UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-16105
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below: STONEPATH GROUP, INC. 401(K) PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
STONEPATH GROUP, INC.
1600 MARKET STREET, SUITE 1515
PHILADELPHIA, PA 19103
STONEPATH GROUP, INC. 401(K) PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
Year Ended December 31, 2003
-1-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Administrative Committee of the
Stonepath Group, Inc. 401(k) Plan
We have audited the accompanying statement of net assets available for benefits
of the Stonepath Group, Inc. 401(k) Plan (the "Plan") as of December 31, 2003,
and the related statement of changes in net assets available for benefits for
the year then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2003, and the changes in net assets available for benefits for the
year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements of the Plan for the year ended December 31, 2003, taken as
a whole. The accompanying supplemental schedule is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audit of the basic financial
statements. In our opinion, the supplemental schedule is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Plymouth Meeting, Pennsylvania
July 9, 2004
-2-
STONEPATH GROUP, INC. 401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2003
ASSETS
------
Investments $ 8,418,128
Participants' loans receivable 246,561
-------------
8,664,689
-------------
Receivables:
Employer contributions 35,367
Participants' contributions 22,027
Other contributions 1,987
-------------
59,381
-------------
TOTAL ASSETS 8,724,070
LIABILITIES
-----------
Accrued expenses 12,024
-------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 8,712,046
=============
See Notes to Financial Statements.
-3-
STONEPATH GROUP, INC. 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 2003
ADDITIONS:
Additions to net assets attributed to:
Net appreciation in fair value of
investments $ 1,297,554
Interest from participant loans 17,967
-------------
1,315,521
-------------
Contributions:
Employer 615,008
Participants 1,393,969
Rollover 58,720
-------------
2,067,697
-------------
TOTAL ADDITIONS 3,383,218
-------------
DEDUCTIONS:
Deductions from net assets attributed to:
Benefits paid to participants 592,950
Administrative expenses 104,086
-------------
TOTAL DEDUCTIONS 697,036
-------------
NET INCREASE 2,686,182
OTHER CHANGES:
Investments transferred-in from other plans 6,025,864
-------------
NET ASSETS AVAILABLE FOR
BENEFITS - END OF YEAR $ 8,712,046
=============
See Notes to Financial Statements.
-4-
(1) DESCRIPTION OF PLAN
The following description of the Stonepath Group, Inc. (the "Company")
401(k) Plan (the "Plan") provides only general information. The
effective date of the Plan is January 1, 2003. Participants should
refer to the Plan document for a more complete description of the
Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering all
full-time employees of the Company who have six months of service and
are age twenty-one or older. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS - Each year, participants may contribute up to 100% of
pretax annual compensation, as defined in the Plan. Participants may
also contribute amounts representing distributions from other qualified
defined benefit or contribution plans. Participants direct the
investment of their contributions into various investment options
offered by the Plan. The Plan currently offers eleven pooled separate
accounts within the UBS Fiduciary Trust Company common collective trust
fund and Company common stock as investment options for participants.
The Company contributes 50% of the first 8% of base compensation that a
participant contributes to the Plan. The matching Company contribution
is participant-directed. Contributions are subject to certain
limitations.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's
contribution and, (b) Plan earnings, and charged with an allocation of
administrative expenses. Allocations of expenses are based on
participant account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
VESTING - Participant's contributions plus actual earnings are 100%
vested immediately. Employer contributions made after January 1, 2003
are generally subject to the following vesting schedule:
Years of Service Vested %
---------------- --------
0 20%
1 40%
2 60%
3 80%
4 100%
PARTICIPANT LOANS - Participants may borrow from their fund accounts a
minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50%
of their account balance. The loans are secured by the balance in the
participant's account and bear interest at rates ranging from 2.0% to
10.5%, which are commensurate with local prevailing rates at the
inception of the loan. Principal and interest are paid ratably through
payroll deductions.
-5-
(1) DESCRIPTION OF PLAN (CONTINUED)
-------------------
PAYMENT OF BENEFITS - On termination of service, a participant will
receive a lump-sum amount equal to the value of the participant's
vested interest in his or her account.
As of December 31, 2003, participants who have elected to withdraw from
the Plan but have not yet been paid have a vested interest in their
accounts totaling $30,878.
FORFEITED ACCOUNTS - At December 31, 2003, forfeited nonvested accounts
totaled $14,437. These accounts will be used to pay administrative
expenses. Also, during the year ended December 31, 2003, employer
contributions were reduced by $1,835 from forfeited nonvested accounts.
INVESTMENT OPTIONS - Upon enrollment in the Plan, participants may
direct employee and Company contributions in the following investment
options:
o UBS Fiduciary Trust Company Common Collective Trust - The
participants may invest in various investment options
under a common collective trust. A description of each
investment option can be found in the Plan document.
o Stonepath Group, Inc. Common Stock
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared
under the accrual method of accounting.
ESTIMATES - The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results may
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION - The value of each
investment option within the common collective trust is determined at
the close of each business day based on fair value as determined by the
respective fund managers. The fair values are generally determined
based on quoted market prices of the funds' investment holdings. The
value of the Company's common stock is based on quoted market price.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
ADMINISTRATIVE EXPENSES - Certain expenses of the Plan are paid by the
sponsor and are not included in the Plan financial statements.
-6-
(3) INVESTMENTS
-----------
The following investments represent 5% or more of the Plan's net assets
available for benefits as of December 31, 2003:
UBS Fiduciary Trust Company
Common Collective Trust Funds
Large Company Growth Portfolio $ 2,222,634
Mid-Cap Growth Portfolio 1,069,980
Guaranteed Investment Contracts Portfolio 894,322
Conservative Bond Portfolio 649,380
Balanced Portfolio 643,318
International Growth Portfolio 607,664
Small Company Value Portfolio 466,740
Stonepath Group, Inc. Common Stock 779,625
During the year ended December 31, 2003, the Plan's investments
(including gains and losses on investments bought and sold, as well as
held during the year) appreciated in value by $1,297,554 as follows:
UBS Fiduciary Trust Company
Common Collective Trust Funds $ 1,088,064
Stonepath Group, Inc. Common Stock 209,490
-----------
$ 1,297,554
===========
(4) PLAN TERMINATION
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants would become 100% vested in their
employer contributions.
(5) TRANSACTIONS WITH PARTIES-IN-INTEREST
-------------------------------------
The Plan held 339,063 shares of Stonepath Group, Inc. common stock
(employer securities) with a fair value of $779,625 as of December 31,
2003. During the year ended December 31, 2003, the Plan purchased
90,254 shares of Stonepath Group, Inc. common stock at a cost of
$196,811, and sold 14,630 shares of Stonepath Group, Inc. common stock
for $34,949. During the year ended December 31, 2003, 263,439 shares of
Stonepath Group, Inc. common stock with a value of $384,910 were
transferred in from other plans.
Certain Plan investments are units of common collective trusts and
money market funds managed by UBS Fiduciary Trust Company, the Plan's
Trustee. Transactions with UBS Fiduciary Trust Company qualify as
party-in-interest transactions. Fees paid by the Plan for asset
management services amounted to $76,715 for the year ended December 31,
2003.
-7-
(6) TAX STATUS
----------
The Plan has adopted a prototype standardized 401(k) profit-sharing
plan and trust sponsored by UBS Fiduciary Trust Company. The prototype
plan has obtained a determination letter dated April 11, 2002, in which
the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal
Revenue Code. UBS Fiduciary Trust Company believes the Plan is
currently designed and being operated in compliance with the applicable
requirement of the Internal Revenue Code; therefore, no provision for
income taxes has been included in the Plan's financial statements.
(7) INVESTMENTS TRANSFERRED IN FROM OTHER PLANS
--------------------------------------------
Effective January 1, 2003, the following plans merged into the
Stonepath Group, Inc. 401(k) Plan and their related investments were
transferred into the Plan:
Investments
Plan Name Transferred
--------- -----------
Global Transportation Services, Inc. Profit Sharing 401(k) Plan $ 3,174,126
MGR, Inc. 401(k) & Profit Sharing Plan 2,645,265
Stonepath Group 401(k) Profit Sharing Plan & Trust 73,787
United American Freight Services, Inc. 401(k) Profit Sharing Plan 132,686
-----------
$ 6,025,864
===========
-8-
SUPPLEMENTAL SCHEDULE
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
(a) (b) (c) (d) (e)
Description
of investments
including maturity
date, rate of interest,
Identity of issue, borrower, collateral, par or Current
lessor, or similar party maturity value Cost value
------- --------------------------------------- -------------------------- -------------- -------------------
UBS Fiduciary Trust Company Common Collective Trust
* GIC Portfolio 31,902.463 shares (1) $ 894,322
* Conservative Bond Portfolio 21,926.859 shares (1) 649,380
* Balanced Portfolio 15,677.647 shares (1) 643,318
* Large Company Growth Portfolio 222,865.144 shares (1) 2,222,633
* Large Company Value Portfolio 6,676.680 shares (1) 334,737
* Mid-Cap Growth Portfolio 131,997.803 shares (1) 1,069,980
* Small Company Value Portfolio 23,223.142 shares (1) 466,740
* International Growth Portfolio 47,869.667 shares (1) 607,664
* International Value Portfolio 16,779.288 shares (1) 236,168
* Fixed Income Index Portfolio 11,246.349 shares (1) 157,069
* S&P 500 Index 23,722.769 shares (1) 318,835
* Cash 37,656.990 shares (1) 37,657
* Stonepath Group, Inc. Stock Fund 339,063.000 shares (1) 779,625
* Participant Loans Interest ranging from
2.00% to 10.50% (1) 246,561
------------
$ 8,664,689
============
* Party-in-interest as defined by ERISA
(1) Cost information may be omitted as Plan assets are participant-directed.
-9-
EXHIBIT LISTING
EXHIBIT
NO. DOCUMENT
------- --------
23.1 Consent of Independent Registered Public Accounting Firm (filed
herewith)
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Stonepath Group, Inc.
Date: July 12, 2004 401(k) Profit Sharing Plan
By: /s/ Bohn H. Crain
--------------------------------
Bohn H. Crain, Authorized
Signatory for Advisory
Committee, as Plan Administrator
-11-
INDEX OF EXHIBITS
EXHIBIT
NO. DOCUMENT
------- ---------
23.1 Consent of Independent Registered Public Accounting Firm (filed
herewith)
-12-